The social isolation to limit the spread of Covid-19 caused a surge in demand for online purchases. Witnessing the development opportunities of online insurance services, many businesses had planned to invest heavily in this sale channel with the expectation to compensate for the serious decline of traditional channels in the current period. However, the reality was not like a dream!
At a planning meeting of a leading market insurer, positive analysis and prospects for revenue over the next two years to three years were given, but funding was needed to get the numbers. That revenue made leaders hesitate.
The initial investment in information technology infrastructure, including websites and sales applications, was not too high. Still, for customers to know and actively buy online, it required marketing investment of several billion dong per month. In the current difficult situation, this was a scary figure for non-life insurance businesses, of which the funding sources for marketing were already very limited.
Besides, to sell online, products must be greatly simplified, especially to constantly research and come up with new and unique products to attract customers, which was not easy.
The Post Telecommunication Joint Stock Insurance Corporation (PTI), one of the pioneering enterprises in the trend of onlineisation, in the past three years, only launched three new products including love insurance, flight cancellation insurance and Anti-Covid insurance.
The representative of Bao Minh Insurance Corporation (BMI) which was an insurance company with the highest revenue growth rate from the online channel (the growth of this segment in 2019 reached nearly 50%) said that besides researching the online product, insurance business had to avoid the situation that the product was sold online, but the certificate of insurance was still a paper copy. Thus, the insurance company would have to invest a lot in digital marketing, combining advertising with banks and travel companies to boost online insurance sales.
Nevertheless, according to the leader of a non-life insurance company investing in online sales, for this model to thrive, three problems need to be solved.
Firstly, not all insurance products could be provided completely online. For example, for car insurance, insurance companies’ processes required a photo of the car before granting coverage. In order to sell this product through online channels, businesses had to build applications on their phones, allowing customers to take photos of their cars at the request of the insurer. However, at present, there were very few businesses doing this, and almost at the experimental stage, the smooth implementation required more time.
Secondly, not only must compete with each other, but online insurance channels of insurance enterprises also had to confront with online sales activities of insurance agents themselves.
The operation of insurance enterprises was always controlled by state management agencies. Typically, the reduction of fees and promotions needed to be notified to the Ministry of Industry and Trade or the provincial Department of Industry and Trade, and some forms needed asking for permission. At the same time, with agents, the control was much more difficult. That could lead to unfair competition on premiums or promotional policies.
Thirdly, it was the problem of large investment costs in the early stages. Selling online was not simply a website or an insurance application that could attract customers.
Although not having to find customers like direct channels or agents, online insurance channels would have to invest heavily in media, advertising, and many attractive promotions with attractive expectations to gain the attention of customers.
The above facts showed that, for the online insurance channel to develop in the Vietnamese insurance market, insurance enterprises must invest heavily in information technology systems to be able to increase their products to sell online. Moreover, the insurance company also had to create an ecosystem of unique features, utilities, superior products and services for this channel.
